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Tuesday, 18 February 2020

Coronavirus Impacts on Shipping

The coronavirus outbreak in China is now playing havoc with global supply chains and is worsening. Many carriers ex China are cancelling sailings and the handful that did depart have left about ten percent full.

As the number of deaths is now in excess of 1,300 and confirmed cases rising over 63,000, some provinces and cities in China have extended movement restrictions until 1 March. This means that most supply chains in China are grinding to a halt.

This week one vessel that is capable of carrying 23,000 TEU departed from China to North Europe with less than 2,000 TEU so the freight contribution is too small to make the voyage profitable. Carriers simply cannot carry on much longer like this and some have begun anchoring their biggest vessels and deploying smaller ships with lower operating costs.


Cargo that is able to be delivered to the port is often not able to be uplifted reliably as shipping line schedules are in increasing turmoil.
Initially there was some discounting of rates but the reality is there is virtually no cargo there so in effect for cargo to travel shippers should really be forced to pay a premium in freight to prevent huge losses on the voyages by the carriers.
Rate levels have become fairly immaterial to most shippers as they just desperately need their cargo shipped to sustain their businesses. Many of them are giving up on China for the time being and trying to source their goods from other countries that are not currently badly affected by the virus.
I predict that as the Coronavirus crisis passes that there will be an unprecedented spike in demand so my team at Depth Logistics and I are proactively trying to lock in rate agreements with carriers for clients now. There will certainly be "peak season" like surcharges carriers will be charging.
All for now,
Brad Skelton

1 comment:

  1. The impact of coronavirus got so big. So many factories and plants stopped their work due to this disease. I don't even know what next will be.

    ReplyDelete